Basic Accounting Work
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| Exercise 1-5
Suppose the following information was taken from the 2017 financial statements of pharmaceutical giant Bramble Corp. (All dollar amounts are in millions.)
| Retained earnings, January 1, 2017 |
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$46,836.3 |
| Cost of goods sold |
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9,460.6 |
| Selling and administrative expenses |
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8,592.7 |
| Dividends |
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3,387.0 |
| Sales revenue |
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38,203.8 |
| Research and development expense |
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5,960.5 |
| Income tax expense |
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2,691.2 |
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After analyzing the data, prepare an income statement for the year ending December 31, 2017. (Enter amounts in millions upto 1 decimal place, e.g. 45.5 million.)
Bramble Corp.
Income Statement
(in millions)
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$ |
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$ |
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$ |
| SHOW LIST OF ACCOUNTS |
| LINK TO TEXT |
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After analyzing the data, prepare a retained earnings statement for the year ending December 31, 2017. (List items that increase retained earnings first. Enter amounts in millions upto 1 decimal place, e.g. 45.5 million.)
Bramble Corp.
Retained Earnings Statement
(in millions)
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$ |
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$ |
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| Exercise 1-11
Wildhorse Co. is the world’s leading producer of ready-to-eat cereal and a leading producer of grain-based convenience foods such as frozen waffles and cereal bars. Suppose the following items were taken from its 2017 income statement and balance sheet. (All dollars are in millions.)
| Retained earnings |
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$4,800 |
| Cost of goods sold |
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6,860 |
| Selling and administrative expenses |
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3,640 |
| Cash |
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340 |
| Notes payable |
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40 |
| Interest expense |
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340 |
| Bonds payable |
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4,700 |
| Inventory |
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740 |
| Sales revenue |
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12,400 |
| Accounts payable |
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1,070 |
| Common stock |
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140 |
| Income tax expense |
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430 |
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In each case, identify whether the item is an asset, liability, stockholders’ equity, revenue, or expense.
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Retained earnings |
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Cost of goods sold |
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Selling and administrative expenses |
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Cash |
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Notes payable |
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Interest expense |
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Bonds payable |
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Inventory |
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Sales revenue |
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Accounts payable |
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Common stock |
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Income tax expense |
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| SHOW LIST OF ACCOUNTS |
| LINK TO TEXT |
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Prepare an income statement for Wildhorse Co. for the year ended December 31, 2017. (Enter amounts in millions, e.g. 45.)
Wildhorse Co.
Income Statement
(in millions)
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$ |
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$ |
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$ |
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Exercise 1-14
Wayne Holtz is the bookkeeper for Windsor, Inc.. Wayne has been trying to get the balance sheet of Windsor, Inc. to balance. It finally balanced, but now he’s not sure it is correct.
Windsor, Inc.
Balance Sheet
December 31, 2017 |
| Assets |
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Liabilities and Stockholders’ Equity |
| Cash |
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$12,400 |
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Accounts payable |
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$10,400 |
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| Supplies |
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15,100 |
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Accounts receivable |
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(17,600 |
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| Equipment |
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34,400 |
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Common stock |
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45,600 |
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| Dividends |
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13,600 |
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Retained earnings |
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37,100 |
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| Total assets |
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$75,500 |
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Total liabilities and stockholders’ equity |
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$75,500 |
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Prepare a correct balance sheet. (List assets in order of liquidity.)
Windsor, Inc.
Balance Sheet |
| Assets |
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$ |
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$ |
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| Liabilities and Stockholders’ Equity |
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$ |
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$ |
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Exercise 2-2
Classify each of the following financial statement items based upon the major balance sheet classifications.
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Prepaid advertising |
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Equipment |
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Trademarks |
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Salaries and wages payable |
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Income taxes payable |
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Retained earnings |
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Accounts receivable |
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Land (held for future use) |
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Patents |
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Bonds payable |
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Common stock |
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Accumulated depreciation—equipment |
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Unearned sales revenue |
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Inventory |
Exercise 2-4
Suppose the following information (in thousands of dollars) is available for Swifty Corporation—famous for ketchup and other fine food products—for the year ended April 30, 2017.
| Prepaid insurance |
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$ 140,700 |
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Buildings |
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$4,002,900 |
| Land |
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72,200 |
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Cash |
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360,900 |
| Goodwill |
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3,980,400 |
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Accounts receivable |
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1,146,100 |
| Trademarks |
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770,800 |
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Accumulated depreciation—buildings |
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2,144,500 |
| Inventory |
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1,269,500 |
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Prepare the assets section of a classified balance sheet. (List current assets in order of liquidity.)
Swifty Corporation
Partial Balance Sheet
(in thousands)
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$ |
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$ |
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| Exercise 2-8
These financial statement items are for Novak Corp. at year-end, July 31, 2017.
| Salaries and wages payable |
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$ 3,980 |
| Salaries and wages expense |
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58,900 |
| Supplies expense |
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16,800 |
| Equipment |
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20,400 |
| Accounts payable |
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4,100 |
| Service revenue |
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67,500 |
| Rent revenue |
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9,700 |
| Notes payable (due in 2020) |
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3,000 |
| Common stock |
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16,000 |
| Cash |
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30,300 |
| Accounts receivable |
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10,980 |
| Accumulated depreciation—equipment |
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7,700 |
| Dividends |
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4,000 |
| Depreciation expense |
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5,700 |
| Retained earnings (beginning of the year) |
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35,100 |
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Prepare an income statement for the year. Novak Corp. did not issue any new stock during the year.
Novak Corp.
Income Statement |
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$ |
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$ |
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$ |
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$ |
| SHOW LIST OF ACCOUNTS |
| LINK TO TEXT
LINK TO TEXT |
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Prepare a retained earnings statement for the year. Novak Corp. did not issue any new stock during the year.
Novak Corp.
Retained Earnings Statement |
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$ |
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$ |
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$ |
| SHOW LIST OF ACCOUNTS |
| LINK TO TEXT
LINK TO TEXT |
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Prepare a classified balance sheet at July 31. (List current assets in order of liquidity.)
Novak Corp.
Balance Sheet |
| Assets |
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$ |
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$ |
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$ |
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| Liabilities and Stockholders’ Equity |
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$ |
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$ |
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$ |
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| SHOW LIST OF ACCOUNTS |
| LINK TO TEXT
LINK TO TEXT |
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Compute the current ratio and debt to assets ratio. (Round answers to 1 decimal place, e.g. 15.2.)
| Current ratio |
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:1 |
| Debt to assets ratio |
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% |
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